Navigating the vibrant yet complex business environment in Vietnam requires a solid understanding of key legal concepts, one of which is the role of legal representatives of a company in Vietnam. These individuals are the backbone of a company’s legal and operational framework, acting as the official voice and decision-maker in various matters. Whether you’re launching a startup or managing an established enterprise, grasping the significance of this position is essential for success. In this comprehensive guide, we’ll explore what it means to be a legal representative in Vietnam, the legal framework that governs them, the appointment process, their responsibilities, and the challenges businesses might face.

What is a Legal Representative in Vietnam?

A legal representative of a company in Vietnam is an individual authorized to act on behalf of the company in all legal and business dealings. This person holds significant authority, from signing contracts to representing the company in court or dealings with government bodies. Under Vietnam’s corporate law, every company—whether a local business or a foreign-invested entity—must appoint at least one legal representative.

This role is deeply rooted in the Law on Enterprises, Vietnam’s primary legislation governing business operations. The legal representative serves as the company’s point of contact for regulatory compliance, ensuring that obligations like tax filings, reporting, and governance standards are met. Given their critical role, choosing the right person as the legal representative of a company in Vietnam demands careful consideration of their expertise, reliability, and familiarity with the local business landscape.

Legal Framework Governing Legal Representatives

The backbone of regulations for legal representatives of a company in Vietnam is the Law on Enterprises, first introduced in 1999 and most recently amended in 2020. This law outlines the rules for establishing and managing businesses, including the appointment and duties of legal representatives.

Key Provisions of the Law on Enterprises

• Mandatory Appointment: Article 12 mandates that every company must have at least one legal representative who resides in Vietnam. If they leave the country for over 30 days, they must delegate their duties in writing to another individual.
• Eligible Positions: For limited liability companies (LLCs), the legal representative can be the chairman of the Members’ Council, the director/general director, or another person named in the company’s charter. For joint-stock companies (JSCs), it’s typically the chairman of the Board of Management or the director/general director.
• Individual Requirement: The legal representative must be a natural person, not a legal entity, and must have full legal capacity.

Additional Regulations

Beyond the Law on Enterprises, Decree No. 01/2021/ND-CP on enterprise registration provides further guidance. For instance, companies must notify the business registration authority within 10 days of any change in their legal representative. Other industry-specific laws may also impose additional requirements, such as in banking or insurance sectors.

This legal framework ensures that legal representatives of a company in Vietnam are accountable and that their authority aligns with the company’s structure and Vietnam’s business regulations.

Appointing a Legal Representative in Vietnam

Appointing a legal representative of a company in Vietnam involves a formal process that varies slightly depending on whether it’s a new or existing company.

For New Companies

When registering a new business, the appointment is part of the enterprise registration process. The application must include:

• The legal representative’s full name, date of birth, nationality, residential address, and identification details.
• The company’s charter, specifying the legal representative’s role and authority.

This step ensures that the representative is officially recognized from the outset.

For Existing Companies

For an existing company, changing the legal representative requires:

1. A formal decision by the competent authority (e.g., Members’ Council for LLCs or Board of Management for JSCs).
2. Notification to the business registration authority within 10 days, accompanied by supporting documents.

The appointee must also accept the role in writing, acknowledging their responsibilities. If a company opts for multiple legal representatives, the charter must clearly define each person’s scope of authority to prevent overlap or confusion.

See more: Establish a company in Vietnam

Special Considerations for Foreign Companies

Foreign-invested enterprises may face additional hurdles, such as restrictions tied to investment conditions or licensing requirements. Ensuring compliance with these rules is critical when appointing a legal representative of a company in Vietnam.

Roles and Responsibilities of Legal Representatives

The legal representative of a company in Vietnam wields broad powers and carries significant responsibilities. Their role is central to the company’s operations and legal standing.

Key Responsibilities

1. Signing Authority: They can sign contracts, agreements, and transactions on the company’s behalf, ranging from commercial deals to government filings.
2. Legal Representation: In disputes or litigation, they represent the company in court or arbitration proceedings.
3. Compliance Oversight: They ensure adherence to laws, including tax, labor, and industry-specific regulations.
4. Reporting Duties: They oversee the submission of mandatory reports, such as financial statements and business updates, to regulatory bodies.
5. Corporate Governance: They facilitate meetings of the company’s governing bodies and execute their decisions.
6. Liaison with Authorities: They act as the primary contact for government agencies, responding to inquiries and providing required information.

Accountability and Support

With great power comes great responsibility. Missteps, such as signing an unfeasible contract, can lead to personal liability for the legal representative, including civil or criminal penalties. To succeed, they must understand Vietnam’s legal landscape thoroughly. Companies should support them with training, legal counsel, and clear guidelines to ensure effective performance.

Challenges and Considerations for Legal Representatives in Vietnam

While vital, the role of a legal representative of a company in Vietnam comes with challenges, especially for foreign businesses or individuals new to the market.

Common Challenges

1. Residency Requirement: The legal representative must reside in Vietnam, posing logistical issues for foreign companies. Options include relocating the representative or appointing a local proxy.
2. Language and Cultural Barriers: Foreign representatives may struggle with Vietnamese language and customs, complicating interactions with local stakeholders.
3. Personal Liability: The risk of personal accountability can deter individuals from accepting the role, requiring careful risk management.
4. Evolving Regulations: Vietnam’s legal system frequently updates, demanding constant vigilance to stay compliant.
5. Multiple Representatives: Companies with more than one legal representative must coordinate their actions to avoid conflicts.

Practical Solutions

To address these issues, companies can:

• Appoint a local representative or provide robust local support for foreign appointees.
• Invest in language training or bilingual staff.
• Establish clear policies for decision-making and compliance.
• Consult legal experts specializing in Vietnam business law.

Proactive planning ensures that legal representatives of a company in Vietnam can perform effectively despite these challenges.

The legal representative of a company in Vietnam plays a pivotal role in ensuring compliance, driving business decisions, and fostering success in a dynamic market. By understanding the legal framework, responsibilities, and challenges associated with this position, companies can position themselves for sustainable growth. Partnering with trusted experts can further simplify this journey. With Informly, businesses gain access to tailored guidance and innovative solutions to navigate Vietnam’s corporate landscape confidently, empowering their legal representatives to thrive and propel their vision forward in one of Southeast Asia’s most vibrant economies.